Barnett shale gas production – on its way downhill? – Preparations for my trip to Texas – 3

Map of active permits and wells currently carried on the oil proration schedule and gas proration schedule database.

The American shale gas revolution began in the area that goes under the name of the Barnett Shale. On the map above you can see active permits and wells. The Railroad Commission of Texas (RRA) is the organization that holds responsibility for the official oil- and gas-statistics in Texas. On 22 August 2013 the RRA published the latest statistics on the Barnett Shale (see report). The official name of the area that lies from southwest to northwest of Dallas is not the Barnett Shale but, rather, “The Newark, East Field”. According to the RAA the area is 13,000 square kilometres in size and in Sweden the area of Uppland is a comparable size, 12,676 square kilometres. The fact that Stockholm lies in an outer area of Uppland makes the comparison even better since the Barnett Shale lies partially under Dallas.

(From the Railroad Commission of Texas)

First, let’s look at the total number of wells that have been drilled. In July, that number passed 17,000 (at the end of July it was 17,067 wells). If we divide the area of the Barnett Shale by the number of wells we obtain a surface area per well of approximately 900 metres x 900 metres (in reality, 875m x 875m). Imagine the whole of Uppland divided up into a patchwork where every square is 900 meters x 900 metres and in every square there is a “fracking” well. An international comparison can be Belgium with 30,528 square kilometers, i.e. the Barnett Shale is nearly half the area of Belgium (43%). We see in the figure that the number of new wells per year is decreasing from the peak year in 2009 when 3594 wells were drilled to only 840 new wells in 2012. In the report, “Drill Baby Drill” David Hughes has made a detailed study of the Barnett Shale and the report includes activities up until May 2012. For individual wells the production in newly drilled wells falls by 61% in the first year and this fact and the fact that production continues to decline thereafter means that every year 1507 new wells must be drilled to maintain a constant level of total production. The fact that they drilled 840 new wells in 2012 should mean therefore that production will decline in 2013.

A permit is required for permission to drill a well and in total there are 24,000 permits currently issued. Of these, 17,000 permits have been used. We see that the greatest number of permits was issued in 2008 when the price of oil and gas rose sharply and the decrease in 2009 would therefore seem natural. That new permits have fallen to a level less than the critical number of new wells required to maintain constant production, 1507 wells, may be a sign that the Barnett Shale has now reached and passed maximal production. The low price of natural gas can also be a reason for the reduced interest in drilling for shale gas. The message for the future of the USA is clear – it will not be flooded by an excess of cheap natural gas.

The production trend that David Hughes called “flat” in 2012 has now been replaced by “declining” and the fact that they are not drilling enough new wells will mean that we can expect a continued decrease in production. In 2011 the Barnett Shale contributed 21.6% of total shale gas production, how much will it be in the future? At the University of Texas, Austin they have made a detailed study of the future of natural gas production from the Barnett Shale: “New, Rigorous Assessment of Shale Gas Reserves Forecasts Reliable Supply from Barnett Shale Through 2030“. The decline we see in the production is exactly what they forecast would happen.

Shale gas are gas within the sediment rook and tight gas is gas that has left the sediment rook and are stored in another type of sediment rooks as sandstone. Information from Shell:

What is shale gas?

Shale gas is a description for a field in which natural gas accumulation is locked in tiny bubble-like pockets within layered sedimentary rock such as shale. Think of it as similar to the way tiny air pockets are trapped in a loaf of bread as it bakes.

While geologists have known for decades that shale gas existed deep beneath many areas of the North American continent, traditional vertical oil and gas drilling methods were able to access only a small fraction of the gas within these formations. But recently, operational efficiencies and proven technology have come together to make shale gas both accessible and economically competitive.

To extract the gas from shale formations, Shell uses thoroughly tested technology in a responsible way.

What is tight gas?

While shale gas is trapped in rock, tight gas describes natural gas that is dispersed within low-porosity silt or sand areas that create a tight-fitting environment for the gas. How tight? Tight gas is defined (in the U.S.) as having less than 10 percent porosity and less than 0.1 millidarcy permeability.
• Porosity is the proportion of void space to the total volume of rock. For example, fresh beach sand has around 50 percent porosity. Tight gas is held in pores up to 20,000 times narrower than a human hair.
• Permeability is the ability of fluid to move through the pores. A person can blow air through a rock sample having about 1000 millidarcies permeability.

In general, the same drilling and completion technology that is effective with shale gas can also be used to access and extract tight gas. Shell uses proven technology in responsible ways to access this needed resource.

Hi Kjell, It’s a shame you were not at the Offshore Europe Lunch. Christof Ruehl, basically said peak oil was over with the shale gas, unfortunately the question session was very short & chairperson lead before I could get mine in. Have you done an analysis of BP’s Statisitical Review especially with regard to unconventionals? I’d be interested to hear your opinions on it………this is how the lunch was described:

The topic moves to energy markets – the short and long term – for the luncheon on Thursday 5 September. The speaker Christof Ruehl is Group Chief Economist and Vice President of BP. He manages BP’s global Economics Team, providing economic input into the company’s commercial decisions. BP’s Economics Team also produces the annual ‘Statistical Review of World Energy and Global Energy Outlook’.